TORONTO: Despite talk of forging new business ties with China, Canadian executives have been slow to diversify into the emerging Asia-Pacific market, industry observers said.
Canadian companies have sent delegates on numerous trips to China in recent months, but they have yet to translate into a significant increase in business between the two countries.
Leaders of those companies instead have preferred to pursue existing and more comfortable relationships closer to home. They rely on the United States as a bigger and easier growth opportunity, said Sarah Kutulakos, executive director of the Canada China Business Council.
"You can do business there in a language and culture that is familiar, in largely the same time zone, and you can be home on the weekend with your family," Kutulakos said.
Still, there's a downside to that connection.
"When the US is growing, that sounds pretty appealing but the growth is no longer there," she said.
Canada's exports to China rose 9 percent last year, but still only accounted for less than 2 percent of overall exports, according to the Canadian Department of Foreign Affairs and International Trade. Some 73 percent of Canada's exports in 2008 were directed at the US market. Meanwhile, the US accounts for almost 49 percent of Canada's foreign direct investment; China accounts for less than 1 percent.
"I think it cuts in two directions," said Fred McMahon, director of the Center for Globalization Studies at the Fraser Institute, an independent international research and educational organization with offices in Canada and the US.
"China is a difficult market - you have to have a lot of patience, and not everything works out," McMahon said. "The other direction is a lot of our business sector is not as aggressive and open to challenges as it could be."
Kutulakos noted that a recent Canadian Manufacturers and Exporters survey found that about two-thirds of Canadian companies believe it is not necessary to have a China strategy.
"We argue that everyone needs a China strategy, even if that strategy is to consciously not do business with China," she said. "You still need to know where in your supply chain China has an impact and be ready for it."
Some industry observers contend that the Canadian government might be responsible for the sluggish pickup in Canada-China business relations. Canadian Prime Minister Stephen Harper is scheduled to make his first visit to China tomorrow.
"The Chinese don't like uncertainties and don't like cold political relationships," said Wenran Jiang, Mactaggart research chair of the China Institute at the University of Alberta.
"So to move the relationship further, that might be the start the businesses are looking for," Jiang said, noting that a better business climate can foster inbound investment.
(China Daily 12/01/2009 page11)